Top 3 Mistakes that New Traders Make When Trading in AllStars Trader Indices

man regretting making trading mistakes

AllStars Trader football player CFDs are the most exciting and innovative new trading product to be introduced for many years, so it is no surprise that everyone is talking about them.  The ability to trade your favourite football stars and profit from your knowledge and passion for football is fun and hopefully rewarding.  

However, alongside the wow factor of making money from your sports knowledge lies the risk of losing your investment.  This article examines three costly mistakes to avoid when trading which still apply when investing in AllStars Trader sports indices. 

Chasing the Win

The uniqueness and excitement of AllStars player CFDs, combined with the passion for the game, make it easy for even the seasoned trader to get carried away. We want you to be successful and keep trading, but to do this you have to be disciplined.  

If you are losing a football match there is always the temptation to throw everyone forward.  Bring on another striker and go for it.  This may work, but you may also give away another goal and have no way back.  The same is true of trading.  You must maintain your defence, accept a draw, rather than end up being thrashed, and losing everything.

If you only have a small deposit then you have to be super careful.  Even if you are trading your favourite players you must not spread yourself too thin.  You have to remember that you will have trading costs, such as commission charges.  For instance, if you deposit $100 into your account and place trades on Mbappe, Messi and Neymar at the same time, you will end up spreading yourself too thin to make any meaningful profits from your trades. Similarly, if you choose to invest in Ronaldo only but trade him in high volumes of $500 and above, you will put yourself in a risky position that can easily blow your account if the trades go against you. 

To avoid this mistake, we advise you to start with a demo account and familiarize yourself with the trading instruments and tools.

Poor Use of Leverage

Leverage is one of the best ways to maximise profit, however, it is a double-edged sword and should be used with caution. New traders tend to overuse their leverage because they only see the potential profit and forget that the same leverage exposes them to a similar amount of loss should the price move against their trades. Therefore it is important to manage your leverage and preserve your margin. You must always leave some remaining margin in your account to bear any losses on your trades.

Not Managing Risk

Like any other CFDs, AllStars Trader football CFDs involve risk.  Even though you might be trading your favourite player, he may not have a good game and lose you money! The best way to avoid this is by using risk management tools. Stop-loss and take-profit options can help you hedge your investment. 

The take-profit tool instructs your broker to close your trading position once your profits reach a pre-set limit. It enables you to benefit from marginal gains and protect your profits. If you buy 1 share of Ronaldo at $51.9, for instance, you can set a take profit order to sell him once his price hits $61.9. When this limit is reached, and your order is executed, you will make a profit of $10. On the other hand, if you think his price will fall and go short on him, you can sell this share at $51.9, and set a take-profit order at $41.9. When his price drops to this set limit, you will take home a profit of $10.

Stop-loss orders, on the other hand, instruct your broker to close your trading position when the market moves against your price predictions. For example, if you buy 1 share of Ronaldo at $51.9, you can set a stop-loss order of $50.9 so that in case his price drops, you will only make a loss of $1. And if you sell that share at $51.9, you can set your stop-loss order at $52.9 so that if the price moves up, you will only stand to lose $1 per share. Such risk management tools should be part of your trading strategy as they will help you avoid unnecessary losses and maximize the smaller profits.

Ultimately, you can only become a successful trader by improving your skills and strategy. If you avoid these three mistakes, you can turn your knowledge and passion for sports into a profitable side hustle. Watch our YouTube videos to learn how you can trade your favourite footballers on the AllStars Trader app and web platform.

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